Let K & K Appraisal Inc. help you determine if you can get rid of your PMIA 20% down payment is typically accepted when getting a mortgage. The lender's liability is often only the difference between the home value and the amount remaining on the loan, so the 20% provides a nice buffer against the charges of foreclosure, reselling the home, and typical value fluctuations in the event a purchaser doesn't pay.During the recent mortgage boom that our country recently experienced, it was customary to see lenders only asking for down payments of 10, 5, 3 or sometimes 0 percent. A lender is able to endure the added risk of the minimal down payment with Private Mortgage Insurance or PMI. This added plan covers the lender in case a borrower is unable to pay on the loan and the value of the property is lower than the balance of the loan. PMI can be costly to a borrower because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and often isn't even tax deductible. It's profitable for the lender because they secure the money, and they receive payment if the borrower is unable to pay, different from a piggyback loan where the lender consumes all the deficits.
How home owners can refrain from paying PMIThe Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the beginning loan amount. Smart homeowners can get off the hook a little earlier. The law guarantees that, upon request of the home owner, the PMI must be released when the principal amount equals only 80 percent.Because it can take many years to get to the point where the principal is just 80% of the initial amount of the loan, it's important to know how your Oklahoma home has increased in value. After all, all of the appreciation you've accomplished over the years counts towards removing PMI. So why pay it after your loan balance has dropped below the 80% mark? Even when nationwide trends hint at decreasing home values, realize that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home might have gained equity before things simmered down. A certified, Oklahoma licensed real estate appraiser can help home owners figure out just when their home's equity rises above the 20% point, as it's a hard thing to know. It is an appraiser's job to understand the market dynamics of their area. At K & K Appraisal Inc., we know when property values have risen or declined. We're experts at analyzing value trends in Oklahoma City, Oklahoma County, and surrounding areas. Faced with data from an appraiser, the mortgage company will usually do away with the PMI with little trouble. At that time, the homeowner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
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